Part 2: Core Transformation for Multi-Country Product Modeling

Multi-country product modeling: Key core transformation considerations (Part II)

This second post in our three-part series on digital transformations at global insurers addresses what companies need to keep in mind during this time of change, namely product, process and pricing.

Everything begins with the product, followed by process, and ends with pricing. Understanding the importance of these three powerful “Ps” during digital transformation is critical to building a world class multi-brand, multi-country policy administration platform. When designing a new product offering within a particular line of business, supporting a global footprint, carriers should keep the following in mind:

· Start small. Trying to build new product models while simultaneously supporting thirty years of sales and marketing policy-based tech debt can seem insurmountable.

· Empower a small, business led team to make big, decisions about complex matters. It should be a foregone conclusion that the more program participants there are, the more objections there will be to the disintegration of decades old product support archetypes.

· Ensure the work stream is formulated to fully identify and resolve the genesis of a policy transaction. Different sales channels produce very distinctive and often times divergent processes requiring deviated business rules, underwriting, terms, and limits.

· Identify one game changing process that has confounded business personnel for years, and focus on finding a solution. With the advent of mobile, there are now plenty available.

· Take the shackles off actuarial. Data scientists are trained to build new models. Make sure they know to remove the box altogether and think big when it comes to pricing a product.

Providing the program team with the above guideposts, subject matter experts from all the countries can better harness powerful business rules components, integrated rating engines, and multicurrency billing options. These new toolkits are sometimes so powerful that the user now has “a book of swatches with too many colors to choose from.”

Which “shade of blue” does one choose? In many instances, the product definition process in the multinational property and casualty environs is complex and often times not completely understood by project teams. Analogous to this process is an automobile assembly line. For example, in the auto industry, many auto manufacturers share production lines using so called “badge engineering,” building core chassis, engines, and transmissions, which were then distinctly marketed across different brands. Although these vehicles appealed to different buyer preferences, with different grills, paint, and exterior styling, the core products shared the same base configuration. This too is the goal for global multinational carriers providing unique products across international boundaries.

For example, for any carrier that sells and maintains an inland marine line of business, multi-country and multicurrency policy and claims management require clear demarcation identifying policy terms and limits, jurisdiction parameters, coverage currency, and claims currency of record. But the core product is the same, and it can be designed as such. Additionally, during a multi-brand, multi-locale, corporate digital transformation, key subject areas for requirements and design vetting include:

1.  Coverables – What is the risk being insured? Digital transformation teams should focus early on the identification of coverable transactions that can affect policy term pricing. What is the common intent to which one brand shares similar characteristics with another, crossing international boundaries?
2. Quick Quote – When does the policy transaction lend itself to a quick quote, thereby alleviating the need for full underwriting rules to initiate? It is paramount that project teams identify “no-touch” business requirements during product model design. For example, does the brand, for a specific locale, necessitate 90% of its quotes to be provided with a limited subset of insured attributes? Or, will the channel being supported require that full policy underwriting commence before generating the quote? Property and casualty quote aggregators normally only provide the multinational carrier with skeleton account characteristics.
3. Rules-based Underwriting – It is a common practice among carriers to require transaction approval and escalation functionality prior to policies being bound and issued. This is often based on an authority profile associated with the user. Underwriting approval limits and approval routing rule sets need to be tightly coupled, allowing for advanced authority functionalities. Authority limits and associated approval requests can be managed and differentiated at granular levels. These can be distinguished by user role, business line, coverages or other factors which carriers choose to use to influence when approvals are needed across a geographic thread.
4. Coverages – The building blocks to providing the insured protection against property loss. Unification of coverage attributes supporting the multi-brand, multinational carrier does not preclude the project team from building brand centric offerings. Identifying coverage nuances during product modeling design can elucidate key differences in process, highlighting the need for underwriting rules demarcation.   
5. Pricing– The selection of a rating engine, either internal to the policy system, or externally maintained, must be dynamic and reciprocal in its ability to support both brand and jurisdiction based coverages. Is the quote in question inclusive of the entire set of policy attributes? Or, is the premium to be loosely estimated based on aggregator collected account characteristics?